By early 2013 Enbridge will have invested more than $1 billion dollars in infrastructure to serve North Dakota production, and increased its takeaway capacity to 475,000 barrels of oil per day, up from 80,000 bopd in 1995.
“Enbridge has had operations in North Dakota for over sixty years,” said Mike Moeller at the North Dakota Governor’s Pipeline Summit June 14, “and we’ve served North Dakota production for about 20 years through our acquisition of the Portal Pipeline system in 1995.”
Moeller is director of Enbridge Pipelines North Dakota.
Expansions in 2008 through 2013 will result in nearly a 600 percent increase in capacity, he said.
Outside of North Dakota, Enbridge owns and operates the largest crude oil transportation system in North America which has the capacity to transport more than 2 million bopd in markets such as the U.S. Midwest, eastern Canada, Cushing, Okla. and most recently the U.S. Gulf Coast.
In the past six months, Enbridge has acquired ConocoPhillips 50 percent interest in the Seaway crude pipeline, as well as reverse the direction it moves oil, which provides access for Enbridge shippers to the U.S. Gulf Coast.
Enbridge, he said, has announced plans to expand its mainline system to access the Midwest refinery markets as well as Canadian refineries, and has also announced plans to re-reverse its pipeline to Montreal allowing Bakken light crude access to the Suncor refinery in Montreal and Valero’s refinery in Quebec City.
Bakken expansion initiatives
Enbridge has two ongoing initiatives in North Dakota intended to increase crude takeaway capacity, Moeller said.
The first is the Bakken Expansion project which currently operates with a capacity of 25,000 bopd but will soon provide an incremental 145,000 bpd capacity and will be in full service in 2013.
The other initiative is the Berthold rail project that will have rail export capacity of 80,000 bopd in January. Moeller said this project has an aggressive construction and execution schedule “spanning 14 short months from project sanctioning to commissioning and startup,” adding that the Beaver Lodge Loop extension, which is part of the Bakken Expansion, will be expanded from 145,000 to 225,000 bopd and can also serve the Berthold rail facility.
Latest on Sandpiper
The Sandpiper pipeline will twin an existing BP line between Beaver Lodge rail facility and Clearbrook, Minn., and Moeller said Enbridge has prepared two cost estimates for the project, one for a 20-inch line and the other for a 24-inch line, which would provide for additional export capacity of between 225,000 and 325,000 bopd.
He added that his counterparts on the Enbridge mainline have been evaluating options over the past six months to deal with congestion on the mainline between Clearbook and Superior, Wis. That Enbridge group recently told Enbridge North Dakota that they are prepared to expand a segment of the mainline if it’s supported by the pipeline backstopping.
Designed to take about 300,000 bopd to premium markets in the U.S. and Canada, Moeller said Enbridge believes the valued proposition with the Sandpiper project is that it will not only provide low-cost transportation solutions to market, but it also access to several premium markets for Bakken crude, including Eastern PADD II, eastern Canada, and now the U.S. Gulf Coast.
All that, Moeller said, results in a maximum netback for the producers, as well as the North Dakota state tax coffers, mineral owners and the like because of the trickle down economic effect.
Paying for Sandpiper
Enbridge is in the process of fine-tuning its tolls and tariffs for Sandpiper, and service is targeted to begin in late 2015.
One of the concerns express by many Enbridge shippers, Moeller explained, is the challenge they face in making financial commitments to large pipeline projects. Shippers would rather use their financial resources to continue drilling activities and getting their production online.
Consequently, Enbridge is proposing to recover its cost of the Sandpiper project through a surcharge on all barrels transported on the Enbridge North Dakota pipeline system, much like Enbridge’s Phase 5 and Phase 6 surcharges that its shippers pay today.
Strategic drivers
The strategic drivers for the projects and Enbridge’s mainline initiatives, Moeller continued, are to promote new markets for high quality Bakken crude produced in North Dakota and to provide phased-capacity pending the Sandpiper expansion that will come online in 2015. And there will be rail capacity once the Sandpiper and Bakken Expansion projects are complete to handle any peaks in production or to serve niche markets.
The Enbridge advantage
Moeller told the audience that the advantage that the Enbridge Sandpiper project will offer is a large capacity, and by operating on a 100 percent surcharge, financial commitments are not required so shippers are not putting their balance sheets up against a pipeline project and ”they can keep that cash for their capex proposals.” The Sandpiper project will provide access to multiple end markets via the Berthold rail facility, the Clearbrook pipeline, and the Enbridge mainline system, and once on the Enbridge mainline, he said, there is an advantage to common carriage status as well as access to multiple premium markets.
Over the last year, Moeller continued, Enbridge has significantly enhanced its ability to access premium markets, providing shippers access to the U.S. Gulf Coast via acquisition and reversal of the Seaway pipeline. Enbridge has enhanced access to Cushing with its recently announced Flanagan South expansion, and enhanced access to Midwest refineries as well as eastern refineries with reversal of Lines 9A and 9B in Montreal.
The company is currently working to further broaden access for its shippers, such as Patoka via their Southern Access expansion, and pipe-to-rails offers solutions to Philadelphia. He said these initiatives are well under way, and Enbridge will be issuing announcements on them in the near future.
Moeller concluded by telling the audience that Enbridge continues to make significant investments in North Dakota to benefit the production, the Sandpiper project the latest in a long string of initiatives that serve Bakken production in North Dakota as well as eastern Montana.
“Where Bakken has not been able to go via pipe before it now has that route as of about 10 days ago.”
